As has been said, panniers alter the bikes C of G more than the frame bag option. It's a bit of an aside but panniers also encourage you to take more stuff than you really need

There was an interesting article in an issue of Adventure Cycling mag last year about the best way to carry weight. They concluded that if you are using panniers you're better with them on the front rather than the rear.

I've also seen panniers 'ripped' off on technical trails ... small gaps and panniers don't always mix.

Even road touring I wonder what the hell people carry in their panniers, I have my kit down to 2 lowrider panniers (which I put on the back) and a drybag strapped to the handlebars. I really do thing its a case of filling the available space rather than taking what is required. Unless going somewhere far more remote than western europe.

Id happily ride my 29er around say a trail centre with drops and jumps like GT with a frame bag containing cooking kit and food with small tent/hennessy hammock under seat and sleeping bag 3/4 theramrest on the Bars no probs but i imagine with panniers the balance would be all wrong.
i only carry 2 litres of water on my back but could add 2 bottles to forks instead,
Panniers front and back carry alot more stuff low down which is fine for wheels on ground riding,
So Horses for courses maybe?
All the long distance offroad events and races in the USA (winter and summer) seem to show riders using frame bags...
One day i will get a nice tourer and it will have nice panniers, for the MTB now on its the frame bag everytime
personal preferance

I don't use cages or a camelback for water with my frame bag. Bladder in the frame bag* to keep the weight low and a normal bike bottle at the front of the frame bag. A light tug of the zip and the bottle is in your hand, no more challenging than getting it out of a bottle cage.

*or in the case of the hottest days of my trip through Spain that would be bladder plus extra two litre bottle in the frame bag and another two litres strapped on the back!